Hey everyone!
New trade for the challenge! In this particular case, I didn't manage to do Monday's trading session so I jumped on the charts today (Tuesday) in the morning to find out one of the potential positions I've been monitoring was ready to be taken.
As we can see, the USDCHF pair was in a clear downtrend structure for several months, after which we had a breakout from the descending channel to test a daily resistance. The market seemed ready for a bullish continuation but ended up presenting a fake breakup of that level.
We retested the false breakout (as in, the resistance was revisited after the fake breakout), and since I couldn't trade that test, I kept waiting until the minor H4 support below broke to enter the market.
Personally, I consider we are in the early phases of an accumulation phase; as we are on a daily time frame, this can last several months. Considering the false breakout of the daily resistance as a signal of a strong presence of supply, I think we can head to the last low made prior to the break of the bearish structure, the point on which it would make sense for strong demand to be waiting.
From that point, we will have more chart information to attempt to deduce if the demand interest in the area is enough to continue accumulating, or if it loses interest and we perhaps end up observing another bearish push.
As a side note, this position has some negative correlation with the Gold short trade we took some weeks ago. Currently, the short-term correlation of Gold and USDCHF seems to be around 60%, which means there are chances that both trades result in profits. However, the correlation between the two on a large time horizon is ~80%, which is also fine to me as it also means this position can work as a hedge to the Gold short in case it ends up hitting the SL.
New trade for the challenge! In this particular case, I didn't manage to do Monday's trading session so I jumped on the charts today (Tuesday) in the morning to find out one of the potential positions I've been monitoring was ready to be taken.
As we can see, the USDCHF pair was in a clear downtrend structure for several months, after which we had a breakout from the descending channel to test a daily resistance. The market seemed ready for a bullish continuation but ended up presenting a fake breakup of that level.
We retested the false breakout (as in, the resistance was revisited after the fake breakout), and since I couldn't trade that test, I kept waiting until the minor H4 support below broke to enter the market.
Personally, I consider we are in the early phases of an accumulation phase; as we are on a daily time frame, this can last several months. Considering the false breakout of the daily resistance as a signal of a strong presence of supply, I think we can head to the last low made prior to the break of the bearish structure, the point on which it would make sense for strong demand to be waiting.
From that point, we will have more chart information to attempt to deduce if the demand interest in the area is enough to continue accumulating, or if it loses interest and we perhaps end up observing another bearish push.
As a side note, this position has some negative correlation with the Gold short trade we took some weeks ago. Currently, the short-term correlation of Gold and USDCHF seems to be around 60%, which means there are chances that both trades result in profits. However, the correlation between the two on a large time horizon is ~80%, which is also fine to me as it also means this position can work as a hedge to the Gold short in case it ends up hitting the SL.
